Cape anagement of Business

CARIBBEAN EXAMINATIONS COUNCIL
Caribbean Advanced Proficiency Examination®
CAPE®
MANAGEMENT OF BUSINESS
SYLLABUS
Effective for examinations fromMay-June 2013
CXC A27/U2/13

Publishedbythe CaribbeanExaminationsCouncil
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Copyright© 2013 by CaribbeanExaminationsCouncil
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CXC A27/U2/13

Contents
INTRODUCTION....................................................................................................................... i
RATIONALE............................................................................................................................. 1
AIMS....................................................................................................................................... 1
SKILLSAND ABILITIESTO BE ASSESSED...................................................................................... 2
STRUCTURE OF THE SYLLABUS.................................................................................................. 3
UNIT 1: MANAGEMENT PRINCIPLESANDPROCESSES
MODULE 1: BUSINESSAND ITS ENVIRONMENT........................................................ 4
MODULE 2: THE MANAGEMENT OF PEOPLE............................................................. 9
MODULE 3: BUSINESSFINANCEANDACCOUNTING...................................................................17
UNIT 2: APPLICATIONSIN MANAGEMENT
MODULE 1: PRODUCTION ANDOPERATIONSMANAGEMENT.....................................................22
MODULE 2: FUNDAMENTALSOF MARKETING............................................................ 27
MODULE 3: SMALL BUSINESS MANAGEMENT ............................................................ 33
OUTLINE OF ASSESSMENT........................................................................................................ 38
REGULATIONS FORPRIVATECANDIDATES ................................................................................ 46
REGULATIONS FORRE-SIT CANDIDATES.................................................................................... 46
ASSESSMENTGRID................................................................................................................... 47
GLOSSARY............................................................................................................................... 48
CXC A24/U2/12

ThisdocumentCXCA24/U2/12 replacesCXCA20/U2/03 issuedin2003.
Please note thatthe syllabushasbeenrevisedandamendmentsare indicatedbyitalics.
Firstissued2003
Revised2012
Amended2013
Please checkthe websitewww.cxc.orgfor updatesonCXC’ssyllabuses.
CXC A24/U2/12

Introduction
The Caribbean Advanced Proficiency Examination (CAPE) is designed to provide certification of the
academic, vocational and technical achievement of students in the Caribbean who, having completed a
minimum of five years of secondary education, wish to further their studies. The examinations address
the skills and knowledge acquired by students under a flexible and articulated system where subjects are
organised in 1-Unit or 2-Unit courses with each Unit containing three
Modules.SubjectsexaminedunderCAPE,maybe studiedconcurrentlyorsingly.
The Caribbean Examinations Council offers three types of certification. The first is the award of a
certificate showing each CAPE Unit completed. The second is the CAPE Diploma, awarded to
candidates who have satisfactorily completed at least six Units including Caribbean Studies. The
third is the CXC Associate Degree, awarded for the satisfactory completion of a prescribed cluster of
seven CAPE Units including Caribbean Studies and Communication Studies. For the CAPE Diploma
and the CXC Associate Degree, candidates must complete the cluster of required Units within a
maximumperiodof five years.
Recognised educational institutions presenting candidates for CXC Associate Degree in one of the
nine categories must, on registering these candidates at the start of the qualifying year, have them
confirm in the required form, the Associate Degree they wish to be awarded. Candidates will not be
awarded any possiblealternativesforwhich they did notapply.
CXC A24/U2/12 i

Management of Business Syllabus
♦ RATIONALE
The dynamic environment within which businesses operate today present both challenges and
opportunities for business leaders. The growth in economic and social needs in most economies also
constitutes another area of great challenge. As students proceed beyond the Caribbean Secondary
Education Certificate (CSEC) level, in pursuit of their careergoals, they must be cognisant
of the changingsocio-economicclimatewithinwhichmodernbusinessesoperate.
Management of Business students must understand the principles that govern the human and
operational interactions within a business, and must be aware of how a business operates within a
society. Moreover, it is imperative that students possess a comprehensive understanding of the
marketsinthe regioninadditiontoknowledge of the global marketplace.
The CAPE Management of Business syllabus provides not only a good foundation for further study of
Management of Business and other related disciplines at the tertiary level, but also opportunities for
students to function not only in existing business organisations, but also as successful entrepreneurs
having developed the required knowledge and understanding of management principles, practices,
and skills required to addressmanagerialproblemsand thechallengesfaced by businesses.
The syllabus will also contribute to the development of the Ideal Caribbean Person as articulated by
the CARICOM Heads of Government. That is, “someone who demonstrates a positive work ethic” and
“values and displays the creative imagination in its various manifestations and nurtures its
development in the economic and entrepreneurial spheres.” In addition, in keeping with the UNESCO
Pillars of Learning, on completion of this course of study students will learn to know, to do, to be, and
to live together having been exposed to the values implicit within human rights and democratic
principles, among others.
♦ AIMS
The syllabusaimsto:
1. develop an understanding of the integrated nature of business organisations and the
environmentinwhichtheyoperate;
2. develop an awareness of how global issues impact the development of business
organisationswithspecialreferencetothe Caribbean;
3. provide basic information on principles, legal issues, and practices of modern management
withspecial reference tothe Caribbean;
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4. develop critical thinking skills that involve analysis, evaluation, decision making and problem
solving;
5. developanunderstandingof the importance of managementof people;
6. develop skills in communicating information effectively in numerical, graphical and verbal
form;
7. provide opportunities for acquisition of prerequisite knowledge and skills necessary to
pursue furtherstudiesandcareerdevelopment;
8. provide knowledgeandskillsneededtobecome successful entrepreneurs;
9. developattitudes,values,andethical practicesrelatedtobusiness;
10. developanappreciationof the needfororganisationstobe goodcorporate citizens.
♦ SKILLS AND ABILITIES TO BE ASSESSED
The skillsthatstudentsare expectedtohave developed oncompletionof thissyllabushave been
groupedunderthree mainheadings:
1. KnowledgeandComprehension;
2. Use of Knowledge;
3. InterpretationandApplication.
Knowledge and Comprehension
The examinationswill testcandidates’skillsandabilityto:
1. grasp and recall basicfacts,concepts,andprinciplesof managementtheory;
2. understandthe diverse managerial functionsandroles;
3. understandthe impactof workforce diversityonthe managementof organisations.
Use of Knowledge
The examinations will testcandidates’skillsandabilityto:
1. select and use facts, theories and concepts appropriately in formulating solutions to
businessproblems;
2. draw conclusionsbasedonabodyof information;
3. distinguishamongvariouscomponentsof businessanditsenvironment.
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Interpretationand Application
The examinationswill testcandidates’skillsandabilityto:
1. assemble and analyse relevant data and information to make projections and solve
problems;
2. draw logical conclusionsandmake recommendationsaboutmanagerial issues.
♦ STRUCTURE OF THE SYLLABUS
The syllabusisdividedintotwo(2) Units.EachUnit comprisesthree Modules.EachModule requires
fifty(50) hours of instruction.
Unit1: ManagementPrinciplesand Processes
Module 1 - BusinessanditsEnvironment
Module 2 - The Managementof People
Module 3 - BusinessFinance andAccounting
Unit2: Applicationin Management
Module 1 - Production and Operations Management
Module 2 - Fundamentalsof Marketing
Module 3 - Small BusinessManagement
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♦ UNIT 1: MANAGEMENT PRINCIPLES AND PROCESSES
MODULE 1: BUSINESS AND ITS ENVIRONMENT
GENERAL OBJECTIVES
On completionof thisModule,studentsshould:
1. understandthe nature andscope of businessanditsrole insociety;
2. understandhowdifferentbusinessorganisationsfunction;
3. appreciatethe importanceof maintaining high ethicalstandardsin businesspractices;
4. appreciate the processof decisionmakinganditsimpactonthe environment;
5. develop an awarenessof theimpact of the externalenvironmenton business.
SPECIFIC OBJECTIVES
Studentsshouldbe able to:
1. distinguish among differenttypesof economicactivity;
2. compare the different types of business organisations based on economic sectors and legal
structures;
3. explain the importanceof setting businessobjectives;
4. explain the importanceof ethics and social responsibility in setting businessobjectives;
5. discussthe processof decision-making in businessorganisations;
6. evaluatethe impactof globalization on Caribbean BusinessOrganisations.
CONTENT
1. Types ofEconomic Activity
Classificationof economicactivity:primary;secondary;tertiary.
2. EconomicSectors and Legal Structures
Main features including ability to raise finance, appropriateness of legal structures, problem
fromchangingfrom one legal structure toanother,advantagesanddisadvantages.
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UNIT 1
MODULE 1: BUSINESS AND ITS ENVIRONMENT (cont'd)
(a) Private SectorOrganisations:
(i) sole-trader;
(ii) partnership;
(iii) private limitedcompany;
(iv) publiclimitedcompany;
(v) co-operative enterprise;
(vi) franchise;
(vii) joint venture (legal element governing formation, financing and
management).
(b) PublicSectorOrganisations:
(i) publiccorporations;
(ii) statutoryboards.
(c) Notfor ProfitOrganisations:
(i) charities;
(ii) non-governmentalorganisations.
(d) Privatisation and Nationalisation.
3. BusinessObjectives
(a) The nature,role,and importance of businessobjectives.
(b) Short,mediumandlong-termobjectives.
(c) Hierarchy of objectives: vision, mission statements; strategic; tactical; operational
objectives.
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UNIT 1
4. BusinessEthics andCorporate Social Responsibility
(a) Importance of businessethicsandintegrity,code of ethics.
(b) Obligations to stakeholders.
(c) Good CorporateGovernance.
5. DecisionMaking
(a) Processof decisionmaking:
(i) conceptof decisionmaking;
(ii) essential features of information for decision making – accuracy, timeliness,
relevance andcosteffectiveness;
(iii) significanceof Qualitative vs.Quantitativedecision-making.
(b) Stagesof decisionmaking(inrelationtoobjectives):
(i) definitionof problem;
(ii) data collection –importance andsources;
(iii) analysisandevaluation;
(iv) formulationof alternative strategies;
(v) implementation;
(vi) evaluation.
(c) Factors affectingdecisionmaking:
(i) governmental,political andlegal;
(ii) social and cultural;
(iii) technological;
(iv) economic;
(v) ecological;
(vi) humanand natural constraints.
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UNIT 1
6. Impact ofGlobalisationonBusiness
(a) Multinational(growth,advantagesand disadvantages).
(b) Role of Government:
(i) Facilitating,enabling environment;
(ii) Developing necessary legalframework.
(c) Consumerbehaviour:Choices,
quality,responsibility.
(d) Domestic Business:
Competition,pricing policy,quality assurance.
(e) Trade Liberalisation.
SuggestedTeachingand LearningActivities
To facilitate students’attainmentof the objectivesinModule 1,teachersare advisedtoengage
studentsinthe teachingandlearningactivitieslistedbelow.
1. Conductfieldinvestigationtodeterminegrowthordecline indifferentbusinesssectors.
2. Engage class in discussion on Porter's Five Forces Model for analysing an industry and
industryanalysisasa project.
3. Engage class in discussions and debates on types of business organisations to enable
students to recognise advantages and disadvantages of one business organisation over
another.
4. Assign different students to listen to business news (both regional and international) and
make an oral presentation to the class to sensitise students to local and regional
developments.
5. Use newspaper clippings on business news for class discussions and students’ journals (on-
line journals,blogs).
6. Invite resource personnel from different types of organisations to share information on their
organisations.
7. Assignexpositoryandargumentative essaysonvarioustopics.
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UNIT 1
8. Assigngroupresearchprojecttofosterteamwork.
9. Conductsimulationexercises,roleplay,videopresentations.
10. Engage class indiscussionof case studies.
Teachersand studentsmayidentifyother activitiesthatare more suitable totheirownclass
settings.
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UNIT 1
MODULE 2: THE MANAGEMENT OF PEOPLE
GENERAL OBJECTIVES
1. appreciate the importance of the application of management theories in the operation of
businessorganisations;
2. understand the roles and responsibilities of employers and employees within an
organisation;
3. developanawarenessof the effectsof humanmotivationonorganisationaleffectiveness;
4. appreciate the broadformal framework of human resourcemanagement.
SPECIFIC OBJECTIVES
1. evaluate the contributionsof managementtheoriestopresentdayorganisations;
2. explainthe featuresof the formal organisational structure;
3. explainthe theoriesandpracticesof motivation;
4. differentiatebetweentypesof leadershipskills,styles;
5. describe thegroup formation process,characteristicsand importanceof effectiveteams;
6. describe possible causesof conflictinorganizations;
7. assesstheeffectivenessof strategiesused to manageconflictin organisations;
8. justifythe needtocope withandmanage change in the organisation;
9. explainthe importance of effectivecommunicationinorganisations;
10. evaluate the importance of human resource managementinorganisations.
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UNIT 1
MODULE 2: THE MANAGEMENT OF PEOPLE (cont'd)
CONTENT
1. The Functionsand Theoriesof Management
(a) Evolution of Management theories (principles and contributions to modern day
organisations):
(i) Classical Model- F.W.Taylor, Henri Fayol,Max Weber;
(ii) Human RelationsModel:Elton Mayo;
(iii) SystemsApproach –open/closed/synergy/entropy);
(iv) Contingency Approach.
(b) Functionsof Management(Definition and Application):
(i) planning;
(ii) organising;
(iii) leading;
(iv) controlling;
(v) staffing.
2. Organisational Structure
(a) Classification of Organisational Structure – (Principles, Advantages and
Disadvantages):
(i) by function;
(ii) by product;
(iii) geographical market;
(iv) matrix;
(v) team;
(vi) network;
(vii) virtual.
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UNIT 1
MODULE 2: THE MANAGEMENT OF PEOPLE (cont’d)
(b) Characteristicsof the Formal Organisational Structure:
(i) hierarchy;
(ii) chainof command;
(iii) span of control;
(iv) line andstaff relationship;
(v) responsibility;
(vi) authority;
(vii) accountability;
(viii) delegation;
(ix) centralisation;
(x) decentralisation.
3. Theory and ApplicationMotivation
(a) Factors that stimulate and influence motivation: individual needs; self-motivation;
abilitytomake choices;environmental opportunities.
(b) Theoriesof motivation:
Maslow’sHierarchy of Needs;Herzberg’sHygieneTheory.
(c) Financial andnon-financial motivational strategies:
(i) financial incentives: payment systems and their effectiveness; appraisal; job
valuationandworkstudy;
(ii) non-financial incentives: individual job needs; participation; job satisfaction;
jobenrichmentandjobenlargement;opportunitiesforpromotion.
(d) Implication to managers: getting the best out of individuals; appreciation of work
and appropriate rewardsystems.
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UNIT 1
MODULE 2: THE MANAGEMENT OF PEOPLE (cont’d)
4. Leadership
(a) Definitionof leadership.
(b) Leadership Theory:McGregor’sTheory X and Theory Y; Trait Theory.
(c) Leadershipskillsincluding:
(i) communication;
(ii) problem-solving;critical thinking.
(d) Leadershipstyles(definition,appropriateness)
(i) autocratic;
(ii) participative/democratic;
(iii) laissez faire;
(iv) transformational.
(e) Informalleadership;itsinfluence on the organisation:
(i) definition of informalleadership;
(ii) advantagesand disadvantagesof informalleadership.
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UNIT 1
5. Groupand Team Management
(a) Definition of Teams/Groups.
(b) Stagesof Group Development(forming,storming,norming,performing,adjourning).
(c) Characteristicsof effectiveteams:
(i) commitment;
(ii) participation;
(iii) trust;
(iv) decisionbyconsensus;
(v) flexibility;
(vi) encouragement;
(vii) supportand growth.
(d) Forces that influence group cohesiveness (including size, group goals, similarities,
diversity,attraction).
(e) Advantagesand Disadvantagesof teamsto theorganisations.
6. Causesof Conflict
Possible Causesof Conflict:
(a) managementstyle;
(b) competitionforscarce resources;
(c) lack of communication;
(d) clashof personalities.
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UNIT 1
7. Strategiesto manage conflict:
(a) avoidance;
(b) smoothing;
(c) compromise;
(d) collaboration;
(e) confrontation.
8. Managementof Change
(a) Nature of change:technical,economic,demographic,social andlegal.
(b) Resistance to change: fear, disrupted habits, loss of control and confidence, poor
training, redistribution of workload and lack of purpose; loss of power, lack of
communication.
(c) Strategiestomanage change.
9. Communicationin Business
(a) Diagram of the CommunicationProcess.
(b) Communication channels (including: oral, written, visual, non-verbal);
communication methods (including: Internet, e-mail, Intranet, fax, video
conferencing).
(c) Linesof Communication:
(i) formal channel - vertical and horizontal;
(ii) informal channel;
(iii) problemsassociatedwithformalchannel;
(iv) formal channel versusinformal channels.
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UNIT 1
(d) Barriersto effectivecommunication:
(i) selective-perceptions;
(ii) attitudes;
(iii) noise;
(iv) cultural bias.
(e) Reducing barriers to communication (including: ensure clear message, choice of
channel,managing feedback,improvingphysicalconditions).
10. Human Resource Management
(a) The role of the human resource management in an organisation: attracting,
developingandmaintaininganeffectiveworkforce.
(b) Functionsof the humanresourcesdepartment:
(i) Recruitment:
- Internal;
- External.
(ii) Selection:
including:application,interviews,testing
(iii) Compensation:
Various types of compensationincluding; wages and salaries, pension fund,
healthinsurance.
(iv) Traininganddevelopment:
Trainingvs.Development(on-the-jobandoff-the-jobtraining).
(v) Performance Management:Performance appraisal:
- fairness;
- participative;
- feedback;
- periodic.
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UNIT 1
(vi) Resistance to change: fear, disrupted habits, loss of control and confidence,
poortraining,redistribution of workload and lackof purpose;
(vii) The importanceof communication in the managementprocess.
To facilitate students’attainmentof the objectivesof Module 2,teachersare advisedtoengage
1. Lectures, tutorials and presentations by teachers and other resource persons with
specialisedknowledge of awide range of contentareas.
2. Engage class inresearchand presentationsbystudents(individuallyandingroups).
3. Engage class in debates and panel discussions on topical issues, for example, strikes, salary
and wagesnegotiations,redundancyanditsimpactonindividual behaviourinorganisations.
4. Assignexperientialactivities.
5. Conductrole playor simulationexercises.
6. Engage class indiscussiononcase studiesonmotivation,leadership,anddecisionmaking.
7. Students reflect and express their thoughts and perceptions by maintenance of journals
whichare subsequentlysharedwithpeers.
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UNIT 1
MODULE 3: BUSINESS FINANCE AND ACCOUNTING
GENERAL OBJECTIVES
1. understand the roles and functions of finance and accounting in the management of
businesswithspecial reference tothe Caribbean;
2. understand the impact of changes in finance and accounting practices on the overall
operationsof business;
3. develop analytical and interpretational skills relating to problem solving in finance and
accounting.
SPECIFIC OBJECTIVES
1. explainthe variousneedforfunds;
2. differentiateamongthe mainsourcesof finance;
3. explainthe maincriteriathatbusinessesuse whenseekingshort- andlong- termfinancing;
4. discuss the roles, functioning and working of money and capital markets and international
financial institutionswithspecial reference tothe Caribbean;
5. specifythe importance of AccountinginformationforbothInternal andExternal users;
6. appraise the differentcomponentsof financial statements;
7. interpretandanalyse keyfinancial statementsthroughthe use of ratioanalysis;
8. explainthe purpose,nature,andusefulnessof budgeting;
9. assess the various methods used by a firm in selecting the most appropriate investment
option.
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UNIT 1
MODULE 3: BUSINESS FINANCE AND ACCOUNTING (cont’d)
CONTENT
1. The Needfor Capital
(a) Start-upor venture capital.
(b) Workingcapital.
(c) Investmentcapital.
2. Sources ofFinance
(a) Equityversusdebt.
(b) Formsof equity:capital andshares.
(c) Formsof debt:debenturesandbonds.
3. Criteriafor SeekingFinance
(a) Sourcesof short-termfinance:trade creditorsandcommercial banks.
(b) Sources of long-term finance: commercial and development banks, venture capital
funds,small businessassociations,developmentfundsandfamily.
(c) Short-termversuslong-termsourcesof finance.
4. Moneyand capital markets and International Financial Institutions
(a) Roles of Regional and International Financial Institutions, for example, CDB, IDB, IMF
and WorldBank:
(i) provide technical andmanagerial advice;
(ii) conduct feasibilitystudiesandeconomicappraisal of countries.
(b) Functioning and workings of Money and Capital Markets: working knowledge of
Stock Exchange withreference tothe Caribbean.
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UNIT 1
5. The need for AccountingInformation
(a) Definitionof Accounting.
(b) Users of Accounting Information (Stakeholders including financial institutions,
suppliers/creditors,managers,investors).
6. ComponentsofFinancial Statements
(a) Working knowledgeof componentsof financialstatements:
(i) IncomeStatement:including sales,costof sale,grossprofit,net profit;
(ii) Balance sheet: including fixed assets, current assets, current liabilities, fixed
liabilities, owner’sequity;
(iii) Cash flowstatements.
(b) Relation between Statement of Financial Position and Statement of Comprehensive
Income.
7. Financial StatementsAnalysis
(a) Useof Accounting Ratios.
(b) Advantagesand disadvantagesof ratio analysis.
(c) Limitationsof Ratio Analysis.
(d) Calculation and Interpretation of Typesof Ratios:
(i) Liquidity Ratios(currentand acid test ratio);
(ii) Profitability Ratios: (Gross Profit Margin; Net Profit Margin; Return on
CapitalEmployed (ROCE);
(iii) Efficiency;Activity Ratios:(StockTurnoverRatio; Debtor Day Ratio);
(iv) Gearing Ratio: Debt/capital employed (Capital employed = fixed assets +
(currentassets – current liabilities); Debt= Long term Debt; or
Debt = Long Term Debt
CapitalExp = (FA + CA)2
(v) Investors/shareholdersRatios:Dividend Yield and EarningsPerShare.
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UNIT 1
8. Budgets andBudgetary Control
(a) Type of budgets:cash,sales,production,materials,purchases,labour.
(b) Importanceof budgeting (usefulnessand limitations).
(c) Budgetary Control(methodsand reasonsforvariances).
9. InvestmentAppraisal
(a) Need for investmentAppraisal.
(b) Analyticalmethodsof Appraisal:
- payback period: average rate of return, net present value (meaning,
interpretationandsimple calculationsrequired).
(c) Comparisonsof Methodsof Appraisal.
1. Encourage students to participate in lectures, tutorials and presentations by teachers and
otherresource personswithspecialisedknowledgeof awide range of contentareas.
2. Engage studentsinanalysisof publishedfinancialstatements.
3. Use case studies in order to reinforce learning and provide opportunities for application of
techniques.
4. Assign students to participate in field trips to established institutions, for example, central
banks,insurance companiesandstockexchange.
5. Engage students in listening to taped materials from various sources, for example, radio and
television,(C.B.U,B.B.C),podcasts,YouTube videos.
6. Assign students to read annual publications of professional journals, for example, N.Y.S.E,
Financial Times.
7. Invite guest speakers from different firms to discuss issues related to business finance and
accounting.
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UNIT 1
RESOURCES
Barkarr, S. Management of Business, Unit I, Caribbean Educational
Publishers.
Cole,G.A. ManagementPracticeof Theory,6th
Edition, London:Thomson
Learning,2004.
Hall,D., RobJ. and Raffo,C. Business Studies, Lancaster: Causeway Press Limited, 1993.
Plunkett,W.R.,etal Management:Meeting and Exceeding CustomerExpectations
9th
Edition, South-WesternCollegePublisher,2007.
Stimpson,P.andSingh,K. Managementof BusinessUnitI, Cambridge UniversityPress,
2007.
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♦ UNIT 2: APPLICATIONS IN MANAGEMENT
MODULE 1: PRODUCTION AND OPERATIONS MANAGEMENT
GENERAL OBJECTIVES
1. understandthe operationsinvolvedinthe productionof goodsandservices;
2. developanawarenessof the importance of productivityandqualityinproduction;
3. appreciate the importance of tools and techniques required for production and operations
management;
4. be aware of the impact of the external environment on the production and operations
function.
SPECIFIC OBJECTIVES
1. describe the majordecisionsinvolvedinthe nature of the productionprocess;
2. explain techniquesinvolved in forecasting;
3. discussthe strategiesinvolved in productdesign;
4. explain the conceptof capacityplanning;
5. examinevariousstrategiesused in production layoutprocess;
6. assesstheimportanceof costing in production;
7. examinethe conceptof inventory management;
8. explain the conceptof lean production and quality management;
9. explain methodsof measuring and improving productivity;
10. assesstheimportanceof projectmanagement.
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UNIT 2
MODULE 1: PRODUCTION AND OPERATIONS MANAGEMENT (cont'd)
CONTENT
1. Nature of Production
(a) Input (factors of production) throughput (production process) output (finished goods
and services).
(b) Production Methods: (job production, batch production, flow production and cell
production).
(c) Location of Production (quantitative factors including site cost, transport cost, labour
cost, revenue cost, qualitative factors including infrastructure, environmental and
planning consideration,managementpreferences).
2. ForecastingTechniques
Forecasting techniques:
(a) sales forcecomposite;
(b) delphi method;
(c) consumersurveys;
(d) jury of experts;
(e) moving average.
3. Product DesignStrategies
(a) Modularisation.
(b) Miniaturisation.
(c) Integration.
(d) Valueanalysis.
(e) CAD – Computer Aided Design, CAM – Computer Aided Manufacturing (basic
principles).
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UNIT 2
4. CapacityPlanning
(a) Definition of capacity.
(b) Importanceof capacityutilisation.
(c) Design capacity.
(d) Efficiency capacity.
(e) Calculation of capacityutilisation (simplecalculations).
(f) Methodsof improving capacity utilisation.
(g) Economiesand diseconomiesof scale.
5. Layout Strategies
(a) Processlayout.
(b) Productionlayout.
(c) FixedPositionlayout.
(d) Cellular layout.
6. Costing
(a) Costof Production (direct/indirectvariable/fixed).
(b) Approachesto costing (simplecalculations):
(i) absorption;
(ii) contribution/marginal.
(c) Application of MarginalCosting:
(i) break-even point, (definition, uses, advantages and disadvantages, simple
calculation of the following: BEP for Output and Sales, Contribution Margin
Sales fora desired Profit,Outputfora desired profit and Margin of safety);
(ii) drawbreak-even charts;
(iii) makeor buy decisions.
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UNIT 2
7. Inventory Management:
(a) Importanceof inventory (stock).
(b) Inventory (stock) controlmanagement:
(i) EOQ (Simplecalculations);
(ii) JustIn Time.
8. Lean Production and Quality Management
(a) Importanceof quality.
(b) Dimension of Quality:
(i) performance;
(ii) features;
(iii) reliability;
(iv) conformance;
(v) durability;
(vi) serviceability;
(vii) aesthetics;
(viii) perceived quality.
(c) Techniquesforimproving quality including:
(i) differencebetween quality controland quality assurance;
(ii) benchmarking;
(iii) ISOQuality Standards;
(iv) outsourcing;
(v) qualitycircles;
(vi) TQM including Kaizen or continuousimprovement.
(d) Lean Production (link between inventory management, quality and capacity and
employeeroles).
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UNIT 2
9. Productivity:
(a) Definition (expressproductivity asan equation).
(b) Factors that impact on productivity including: (technology, training, market demand,
competition,qualityof laboursupply,levelof pricing).
10. Project Management(studentsare requiredto prepare and interpretdiagrams of models)
(a) Critical pathmethod(CPM).
(b) Decisiontrees.
NB (Studentsare requiredto prepare and interpretdiagrams of the models)
1. Encourage students to participate in lectures, tutorials and presentations by teachers and
otherresource personswithspecialisedknowledgeof awide range of contentareas.
2. Engage studentsinresearchandpresentations(individuallyandingroups).
3. Encourage students to participate in class debates and panel discussions on topical issues
relatedtoproductionandoperationsmanagement.
4. Conductexperientialactivitiesrelatedtoproductionandoperationsmanagement.
5. Encourage students to interpret issues related to production and operations management
throughrole playor simulationexercises.
6. Engage students in online/class discussion on case studies related to production and
operationsmanagement.
7. Studentsreporttoclass onblogpostingsand YouTube videospertainingtoissuesaddressed.
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UNIT 2
MODULE 2: FUNDAMENTALS OF MARKETING
GENERAL OBJECTIVES
1. understandthe role andimportance of marketing;
2. assimilate the principlesof marketingmanagement;
3. developanawarenessof the impactof the external environmentforcesonmarketing.
SPECIFIC OBJECTIVES
1. define the term “marketing” and relate it to the concepts of “market”, “exchange” and
“valueadded”;
2. assesstheimplications of variousmarketing concepts;
3. distinguish between the micro- and macro- environments in which a firm operates and their
effectsonthe marketingstrategyof the firm;
4. describe the elementsof the marketingresearchprocess;
5. assessthe principlesof marketsegmentation;
6. explainthe principlesof productmanagement;
7. evaluate variouspricingstrategies;
8. discuss themajorprinciples of distribution;
9. examine the majortoolsof promotion and theirimplications;
10. discussthe importanceof internetmarketing decisions.
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UNIT 2
MODULE 2: FUNDAMENTALS OF MARKETING (cont’d)
CONTENT
1. The Conceptof Marketing
(a) Definitionsof marketing.
(b) Relatedconcepts:
(i) markets;
(ii) value added;
(iii) exchange transactions.
2. Implicationsof DifferentMarketingConcepts
(a) The MarketingConcepts.
(b) The product conceptand implications.
(c) The productionconceptand implications.
(d) The sellingconceptandimplications.
(e) The societal marketing concept and its implications.
3. The MarketingEnvironment
(a) Compositionof the MarketingEnvironment:
(i) micro-environment;
(ii) macro-environment.
(b) Forcesin the micro-environment:
(i) company’ssuppliers;
(ii) competitors;
(iii) marketingintermediaries;
(iv) customers.
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UNIT 2
(c) Forcesin the macro-environment:
(i) demographicfactors;
(ii) economicfactors;
(iii) natural factors;
(iv) political factors;
(v) cultural factors.
4. Marketing Research
(a) Role and importanceof marketresearch.
(b) Importanceof developing a research plan.
(c) Describe the stagesof Market Research:
(i) managementproblemidentification;
(ii) researchobjectives;
(iii) sourcesof data - primary,secondary;
(iv) sampling- probabilityandnon-probability;
(v) research techniques - focus groups, surveys, in-depth interviews;
observation;
(vi) analysisandpresentationof results.
(d) Limitationsof MarketResearch.
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UNIT 2
5. PrinciplesofMarket Segmentation
(a) Importanceof segmentation.
(b) Niche,target,massmarketing.
(c) Basesof segmentation:
(i) demographic;
(ii) geographic;
(iii) behavioural.
(d) Consumerbuying behaviour:
(i) the buying process;
(ii) factorsinfluencing buying behaviour.
6. Product Management
(a) The concept of product – core,formal or actual,augmented.
(b) Dimensionsof the productmix.
(c) Productline and productextension.
(d) Boston Matrix.
(e) Newproductdevelopmentprocess.
(f) Productlife cycle.
(g) Brandingand packaging.
(h) Characteristicsof services compared to goods.
7. PricingDecision
(a) Introduction to Pricing - definition,role and importance.
(b) Factors influencing pricing decisions (including elasticity of demand, demand,
income,consumerpreference).
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UNIT 2
(c) Pricingstrategies,including:
(i) cost pluspricing;
(ii) competitionpricing;
(iii) perceivedvalue;
(iv) goingrate;
(v) penetrationpricingandprice skimming.
8. DistributionManagement
(a) Role of distribution in an organisation.
(b) Factors influencingdistributiondecisions.
(c) Typesof distributionchannels (including direct,indirect).
(d) Introduction to logistics strategy.
(e) Types of distribution strategies (intensive, selective, exclusive).
9. Promotion Strategy
(a) Objectives of promotion.
(b) Toolsof promotionandtheirrelativeadvantages:
(i) advertising;
(ii) personal selling;
(iii) salespromotion;
(iv) publicity.
10. Internet Marketing
(a) Developmentof Internetmarketing.
(b) Opportunitiescreated by Internetmarketing.
(c) Challengesposed by Internetmarketing.
(d) Importanceof e-commerceto businessorganisations.
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UNIT 2
SuggestedTeachingand Learning Activities
To facilitate students’attainmentof the objectivesinModule 2,teachersare advisedtoengage
1. Engage studentsinsimulatedcase studiesrelatedtomarketing.
2. Engage studentsingroupprojectsto fosterteamwork.
3. Encourage students to participate in panel discussion on marketing issues conducted
by external resource persons.
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UNIT 2
MODULE 3: SMALL BUSINESS MANAGEMENT
GENERAL OBJECTIVES
1. appreciate the nature of entrepreneurship;
2. developanawarenessof the characteristicsof small businessmanagement.
SPECIFIC OBJECTIVES
1. explainthe nature andcharacteristicsof entrepreneurship;
2. explain the relationship between business organisations and the economic system in which
they operate;
3. assessthecriteria for measuring sizeand growth of business;
4. assessthechallenges and opportunitiesfaced by smallbusinesses;
5. describe thetypesof assistanceagenciesofferto small businesses;
6. develop a businessplan.
CONTENT
1. The Nature and Characteristics ofEntrepreneurship
(a) Definitionof entrepreneurship.
(b) Corporate Entrepreneurship(intrapreneurship).
(c) Social Entrepreneurship.
(d) Characteristicsof successful entrepreneurs.
2. Businessand EconomicSystems
(a) Economic systems in which businesses operate (free economy, mixed economy,
planned economy).
(b) The impactof the economicsystemon businessdecision-making.
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UNIT 2
MODULE 3: SMALL BUSINESS MANAGEMENT (cont’d)
3. Size andGrowth ofBusiness
(a) Criteria for measuring sizeand growth:
(i) output;
(ii) labourforce;
(iii) marketshare;
(iv) capital structure.
(b) Advantagesand disadvantagesof smallfirmsvs.large firms:
(i) size and financialrequirements;
(ii) the economiesof scale;
(iii) strategiesforgrowth;
(iv) managementand control;
(v) lack of record keeping;
(vi) working capitaldeficiencies;
(vii) poormanagementskills;
(viii) regulation and Legislation.
4. MajorChallenges and Opportunities faced by Small Businesses including
(a) Identifyingsuccessful businessopportunities.
(b) Sourcingcapital (finance).
(c) Selection of businesstypes(soletrader,partnership,company).
(d) Determiningalocation.
(e) Globalisationandtrade liberalisation.
(f) E-commerce.
(g) Intellectual property.
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UNIT 2
5. Types and Nature ofAssistanceAvailableto Small Firms
(a) AgenciesthatAssistSmall Businesses:
(i) Governmental Agencies;
(ii) Non-governmental Agencies;
(iii) Financial Institutions.
(b) Typesof Assistance OfferedtoSmall Businesses:
(i) financial;
(ii) technical;
(iii) educationandtraining.
6. Preparationof a BusinessPlanfor a Small Business
(a) Definition of a BusinessPlan;
(b) ExecutiveSummary;
(c) BusinessDescription:
(i) legal establishmenthistory;
(ii) start-up plans.
(c) BusinessEnvironmentAnalysis:
(i) targetmarket;
(ii) customerneeds;
(iii) location.
(d) Industry Background.
(e) CompetitorAnalysis:
who are yourcompetitors.
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UNIT 2
(f) MarketAnalysis:
(i) customerneeds;
(ii) wherethey are;
(iii) howto reach them.
(g) Marketing Plan:
(i) pricing strategy;
(ii) promotion strategy;
(iii) distribution strategy.
(h) OperationsPlan:
(i) cost of production;
(ii) machinery.
(i) ManagerialSummary:
(i) managementpersonnel;
(ii) staffing.
(j) FinancialPlan:
(i) profitand loss;
(ii) cash flows;
(iii) break-even analysis;
(iv) sourceof funds;
(v) businessratios;
(vi) assumptions.
CXC A24/U2/12
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UNIT 2
To facilitate students’ attainmentof the objectivesinModule 3,teachersare advisedtoengage
1. Decide on a “product” or “service” company and allow students to determine what each
companywill produce oroffer.
2. Assign students to develop a questionnaire to investigate if there is a need to start a
companyof theirchoice.
3. Developayearlysalesestimateandacash flow budgetfortheircompany.
4. Establish and operate a small store to sell items used by students in the school, involving the
stepsof:ordering,banking,inventory,costandsalesanalysis,sales.
5. Create a listof costs to start the business.
6. Encourage students to work in groups to “sell” specific items to the rest of the class using
the sales and marketingmethodsdiscussedinthe class.
7. Studentscritique businessplansandoffersuggestionsforimprovement.
RESOURCES
Birchall,JohnandMorris, Graham BusinessStudies,Surrey:UnitedKingdom: ThomasNelsonand
SonsLtd., Walton-on-Thames,1995.
Good,Walter S. Building a Dream: A Comprehensive Guide to Starting a Business
of Your Own,Toronto:McGraw Hill Ryerson,1993.
Hall,Dave,Jones,RobandRaffo,Carlo Business Studies, Lancaster: Causeway Press Limited, 1993.
Hammond,Susan Business Studies, United Kingdom: Longman Group Ltd., 1994.
Hanson,Ward Principles of Internet Marketing: South Western College
Publishing,2000.
CXC A24/U2/12
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♦ OUTLINE OF ASSESSMENT
Each Unit of the syllabus will be assessed separately. The same scheme of assessment will be applied
to each Module ineachUnit. Gradeswill be awardedindependentlyforeachUnit.
The Assessment will comprise two components, one external component and one internal.
Candidates must complete the School-Based Assessment for the first Unit that they write.
Candidates may carry forward the School-Based Assessment mark from the first Unit written to the
second Unit (irrespective of the mark earned), or opt to complete the School-Based Assessment for
the secondUnit as well.
EXTERNAL ASSESSMENT FOR EACH UNIT (80 per cent)
Paper 01 Thispaperconsistsof forty-five (45) multiple-choice 30 per cent
(1 hour 15 minutes) items. There are fifteen (15) items on each
Module.
Paper 02 This paper consists of three sections, each 50 per cent
(2 hours 30 minutes) corresponding to a Module in the Unit. Each
section will contain two essay type questions.
Studentsare requiredtoattemptthree questions,
one fromeach section.
SCHOOL-BASED ASSESSMENT FOR EACH UNIT (20 per cent)
Paper 03/1
A research paper of approximately 2,500 words, based on any topic covered in any one, two or all
three Modules of the Unit being assessed. The School-Based Assessment for each Unit requires that
candidates undertake a project which must demonstrate their skills in research, analysis, evaluation
and presentationof information.
Candidates who, in the same year, register for both Units of CAPE Management of Business may opt to:
(a) submita separate School-BasedAssessmentassignmentforeachUnit;or
(b) submita single School-BasedAssessmentassignmentfromeitherUnit01 or Unit 02.
Candidateswhooptfor(b) must indicate fromwhichUnitthe School-BasedAssessmentassignment
was selected.
Paper 03/2
Private candidatesare requiredtowrite anAlternative Paper –Paper03/2. Detailsare on page 43.
CXC A24/U2/12
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MODERATION OF SCHOOL-BASED ASSESSMENT
School-Based AssessmentRecord Sheetsareavailableonlinevia the CXC’swebsitewww.cxc.org.
All School-Based Assessment Record of marks must be submitted online using the SBA data capture
module of the Online Registration System (ORS). A sample of assignments will be requested by CXC
for moderation purposes. These assignments will be re-assessed by CXC Examiners who moderate
the School-Based Assessment. Teachers’ marks may be adjusted as a result of moderation. The
Examiners’ comments will be sent to schools. All samples must be delivered to the specified marking
venuesby the stipulated deadlines.
Copies of the students' assignment that are not submitted must be retained by the school until three
monthsafterpublication by CXCof the examination results.
ASSESSMENT DETAILS
External AssessmentbyWrittenPapers (80 per cent of Total Assessment)
Paper 01 (1 hour 15 minutes – 30 per cent of Total Assessment)
1. Numbersof Questions
All questions are compulsory. This paper will consist of 45 multiple-choice questions. There
will be 15 questionsfromeachModule.
2. SyllabusCoverage
(a) Knowledgeof the entire syllabusisrequired.
(b) The intention of this paper is to test candidates’ knowledge across the breadth of
the syllabus.
3. Mark Allocation
(a) One mark will be assignedforeachquestion.
(b) The total numberof marksavailable forthispaperis45.
(c) Thispapercontributes30 per centtowardsthe final assessment.
4. Use of Calculators
Candidatesmayuse silentnon-programmable calculators.
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Paper 02 (2 hours 30 minutes – 50 per cent of Total Assessment)
Thispaperwill be dividedintothree sections,eachsectioncorrespondingtoa Module of the Unit.
CompositionofPaper
Thispaperwill consistof six essaysorextendedresponsequestions.
There will be twoquestionsineachsection.
Candidatesare requiredtoattemptthree questions,one fromeachsection.
The total numberof marksavailable forthe paperis75.
Thispapercontributes50 per centtowardsthe final assessment.
SyllabusCoverage
Each question requires a greater depth of understanding than those questions in
Paper01.
The purpose of thispaper isto testcandidates’in-depthknowledge of the syllabus.
QuestionType
Questionsrequireanextendedresponse involvingreasoning,analysisandsynthesis.
Mark Allocation
Each questionisworth25 marks.
Award of Marks
Marks will be awardedfor:
clearlogical reasoning;
evidence of ability to analyse a problem step by step and to apply principles and
practices,skillsandknowledgetoreacha logical conclusion;
evidence of problemsolvingability;
evidence of the abilitytosynthesise information.
Full markswill be awardedwhencandidatesmeetall criteria.
CXC A24/U2/12
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SCHOOL-BASED ASSESSMENT
The Project- Paper 03/1
School-Based Assessment is an integral part of student assessment in the course covered by this
syllabus. It is intended to assist students in acquiring certain knowledge, skills and attitudes that are
associated with the subject. The activities for the School-Based Assessment are linked to the syllabus
and should form part of the learning activities to enable the student to achieve the objectives of the
syllabus.
During the course of study for the subject, students obtain marks for the competence they develop
and demonstrate in undertaking their School-Based Assessment assignments. These marks
contribute to the final marks and grades that are awarded to students for their performance in the
examination.
The guidelines provided in this syllabus for selecting appropriate tasks are intended to assist
teachers and students in selecting assignments that are valid for the purpose of School-Based
Assessment. The guidelines provided for the assessment of the assignments are intended to assist
teachers in awarding marks that are reliable estimates of the achievement of students in the School-
Based Assessment component of the course. In order to ensure that the scores awarded by teachers
are consistent with the CXC standards, the Council undertakes the moderation of a sample of the
School-BasedAssessmentassignmentsmarkedbyeachteacher.
PresentationofProject
1. The aims of the projectare to:
(a) promote self-learning;
(b) allow teachers the opportunity to engage in the formative assessment of their
students;
(c) allow students to enhance their understanding of the nature of business
organisationsthroughlocal studies;
(d) allow students to display evidence of careful observation and some degree of
originalityintheirwork;
(e) allow students to analyse business information gathered and make practical
decisions;
(f) explore more fully, some areas of the Unit which may not be assessed adequately in
an external examination.
2. Requirements
Students must choose a firm (or simulate a firm) on which they would do their investigative
research project. The project should afford students the opportunity to pursue areas of
personal interest. Students must undertake a project which embraces any one, two, or all
three Moduleswithinthe Unitbeingassessed.
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PrimarySources of Data
Candidates can use primary sources of data in their research activities. These include
informationgatheredthroughquestionnaires,andface toface interviews.
SecondarySources
Secondary sources of data can also be used. These include newspapers, trade and
professional journals, magazines, (such as News Week, Times) and documentation on the
firmstudied.
3. Managementof the Project
(a) An earlystartto planningprojectworkishighlyrecommended.
(b) Each candidate should know the requirements of the project and its assessment
procedures,aspart of the orientationtothe Unit.
(c) Teachers should guide the candidates in choosing appropriate projects that
relate tothe candidates’ interestandthe specificobjectivesidentified.
(d) A schedule of the dates for submitting project work (agreed by teachers and
candidates) shouldbe established.
(e) A teacher should offer guidance in the data collection process and the preparation
of the report.
4. ProjectReports
A candidate’sprojectshouldbe presentedinasoftfolderor electronically, bearingthe
candidate’snumber,name of subjectandthe date submitted.The projectdocumentshould
comprise:
(a) title;
(b) table of contents;
(c) introduction:
(i) topic/aimof the project;
(ii) background.
(d) literature review;
(e) methodology;
(f) presentation of data;
(g) analysisof data;
(h) interpretation of results;
(i) conclusionsandrecommendations;
(j) referencesandcitations.
The report (approximately2500 words) shouldbe typeddouble-spacedor hand-writtenlegibly.
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Skillsto be assessed
1. KnowledgeandUnderstanding: candidate’s ability to demonstrate knowledge and
understandingof the objectivesbeingassessedinthe
Module.
2. Application: candidate’sabilitytocollect,classifyandcommunicate
information.
3. Analysis: candidate’sabilitytodistinguishrelationshipsamong
componentsof the business environment.
4. EvaluationandReasoned candidate’sabilitytointerpret,make judgementand
Judgement: recommendationsappropriatetothe businessunder
investigation.
5. Presentation: candidate’sabilitytopresentthe reportusing,where
necessary,relevantcharts,tablesandgraphs.
MARK ALLOCATION FOR THE SCHOOL-BASED ASSESSMENT
1. Introduction 6
2. Literature Review 10
3. Methodology 6
4. Presentationof Data 6
5(a) Analysisof Data 6
5(b) Interpretationof Results 6
6. ConclusionsandRecommendations 6
7. Communicationof informationinalogical wayusingcorrectgrammar 6
8. ReferencesandCitations 3
9. Overall Presentationof Report 5
Total 60
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DETAILED MARK SCHEME FOR THE SCHOOL-BASED ASSESSMENT
MARKS
1. Introduction [6 marks]
Topic Statement/Aimof theproject
2• Thesis statementis conciseand gives clear direction to theproject
• Justification forthe topicshowshow theprojectwill contributeto a 2
better understandingof businessprinciples
Background of theproject
2• Background makesreferenceto previouspublished related studies and
bearsrelevance to presentproject
2. Literature Review [10 marks]
• Literature review providesunderstanding and insightsinto thefirm 4
being studied
4• Literature review providesa thorough treatmentof previously published
related studies
2• Literature review makesreferenceto at leasttwo primary/secondary
sources
3. Methodology [6 marks]
• Research design well defined 2
• Sampleadequately described 2
• Research instrumentaccurately described 2
4. Presentationof Data [6 marks]
• Datapresented are relevantto the aimsof theproject 2
• Dataare accurately coded and systematically organized to facilitate data 2
analysis
2• Datapresented in an appropriateformusing tables,charts and graphs
5(a) AnalysisofData [6 marks]
• Dataare summarized accurately using descriptivestatistics 3
• Datasummary is meaningfuland related to findings 3
5(b) Interpretation ofResults [6 marks]
• Interpretation of resultsis consistent with findings 2
• Results areinterpreted in light of businesstheoriesand concepts 2
• Discussion of results incorporatespreviousresearch 2
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DETAILED MARK SCHEME FOR THE SCHOOL-BASED ASSESSMENT
MARKS
6. Conclusionsand Recommendations [6 marks]
• Conclusionsare logicaland based on findings 2
• Recommendations arerealistic and informed by findings 2
• Recommendationscontributeto a better understanding of thetopicand to 2
generalbusinessprinciples
7. Communicationof Information ina Logical way using Correct Grammar [6 marks]
• Consistently used correct spelling 2
• Consistently used correctgrammar 2
• Expression of ideas clear and unambiguous 2
8. ReferencesandCitations [ 3 marks]
• Acknowledgessourcesthroughouttheproject 1
• Bibliography forpublicationswritten in alphabeticalorderand includes 1
namesof authors,publishers,and datesof publication
1• Bibliography forinternetsites includes addressof website,namesof authors
or organization and dateof access/retrieval
9. Overall Presentationof Report [ 5 marks]
• Report is within therecommended word limit 1
• Layoutof the reportfollowscorrect format,and includesa tableof contents 2
and coverpagewith relevantinformation
2• Report is neat,legible and coherent
TOTAL 60 marks
Paper 03/2 (1 hour 30 minutes)
1. Numberof Questions
This Paper is based on a case study incorporating objectives of the syllabus. The paper
consists of three compulsory questions. The three questions may be divided into parts. The
papertestsskillssimilartothose listedinthe School-BasedAssessment(Paper03/1).
2. QuestionType
Each question requires candidates to respondeither in the form of an extended essay or a
short paragraph.
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3. Mark Allocation
The paper is worth 60 marks (20 marks per question) and contributes 20 per cent towards
the final assessment.
4. Award of Marks
Marks are awardedfor expression,organisationandcontent.
♦ REGULATIONS FOR PRIVATE CANDIDATES
Paper 03/2 (1 hour 30 minutes)
Private candidateswillbe requiredtowrite Papers01,02 and Paper03/2.
♦ REGULATIONS FOR RE-SIT CANDIDATES
Re-sit candidates must complete Papers 01 and 02 of the examination for the year for which they re-
register. Re-sit candidates may elect not to repeat the School-Based Assessment component,
providedtheyre-write the examinationnolaterthantwoyearsfollowingtheirfirstattempt.
Re-sit candidates may opt to complete a School-Based Assessment for each Unit written or may opt
to reuse anotherSBA score whichsatisfiesanyof the conditionslistedat(a) or(b) below.
(a) A candidate who re-writes the examination in the same Unit within two years may
reuse the moderated SBA score earned in the previous sitting within the preceding
two years. Candidates re-using SBA scores in this way must register as ‘Re-sit
candidates’ and must provide the previous candidate number. Candidates are no
longer required to earn a moderated score that is at least 50 per cent of the
maximumpossiblescore;any moderated scoremay bere-used.
(b) Candidates who enter for Unit 1 or Unit 2, in different sittings, may re-use a
moderated SBA score obtained in a previous sitting of either Unit within the
preceding two years. The SBA score may be re-used in either Unit, or in both Units,
irrespective of the Unit in which it was obtained. Candidates re-using SBA scores in
thisway mustregisteras‘Transfer’candidates.
Re-sitcandidatesmaybe enteredthroughschools,recognisededucational institutions,orthe Local
Registrar’sOffice.
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♦ ASSESSMENT GRID
The AssessmentGridforeachUnit showingmarksassignedtoeachpaperand to eachModule,and
the percentage contribution of eachpapertothe total scores.
Papers Module 1 Module 2 Module 3 Total (%)
External Assessment
Paper01 30 30 30 90 (30)
Multiple-choice questions
Paper02
Essay/ExtendedResponse 50 50 50 150 (50)
School-BasedAssessment
Paper03/1 or Paper03/2 20 20 20 60 (20)
Total 100 100 100 300 (100)
CXC A24/U2/12
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♦ GLOSSARY
WORD DEFINITION/MEANING
Account for Explain the reasons for, giving an indication of all relevant circumstances.
Very different from ‘Give an account of’, which asks only for a detailed description.
Analyse Study in depth, identifying and describing in detail the main characteristics.
Assess Examine closely, with a view to measuring or ‘weighing up’ a particular situation.
Consider in a balanced way: strengths and weaknesses, pointsfor and against.
In conclusion, state your judgement clearly.
Comment State clearly and in a moderate fashion your opinions on the material in question.
Support your views with references to suitable evidence or with explanation as
appropriate.
Compare Look for qualities or characteristics that resemble each other. Emphasise similarities
but be aware also of points of differences.
Contrast Stress the dissimilarities and differences between the items in question, but do not ignore
points of similarities.
Criticise Express your balanced judgement about the merit or truth of the material in question.
Give the results of your scrutiny, establishing both strengths and weaknesses.
Be specific.
Define Give, concise, clear and authoritative meanings. Do not give too many details, but be
sure to state the limits of the definition. Show how the thing you are defining differs
fromthings in other categories.
Describe Recount, characterize, sketch or relate in sequence or story form.
Discuss Examine and analyse carefully, giving reasons pro and con, advantages and
disadvantages. Be complete, and give details. You must consider all sides of the issue
and reach a balanced conclusion.
Enumerate State in list or outline form, giving points concisely one by one.
Evaluate Carefully appraise the matter in hand, citing both advantages and limitations.
Emphasise the views of authorities as well as your personal estimation.
Explain Clarify, interpret and spell out the material you present. Give reasons for important
features or developments, and try to analyse causes.
How far… Similar to questions based on the “To what extent…” approach. Here you are expected
to make your case or present your material in the usual way.
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WORD DEFINITION/MEANING
Illustrate Use specific examples,allusions,figures or diagrams to explain,demonstrate or clarify a
problem, situation orview.
Interpret Translate,give examples of,express in simple terms or comment on a subject,usually
giving yourjudgement about it.
Justify Prove,make out a case or give reasons for decisionsor conclusions,takingpains to be
convincing.
List As in ‘enumerate’, write an itemised seriesof concise statements.
Outline Provide a framework describing under main point and subordinate points,omitting
minor details and stressing the arrangement or classification of the material.
Prove Establish that something is true by citing factual evidence or giving clear reasons.
Relate Show how things are related to or connected with each other, or how one causes
another,correlateswith another,or is like another.
Review Examine a subject critically,analysing and commenting on the important points and
stages of development.
State Present the main points in brief, clear sequences.
Summarise Give the main points or facts in condensed form, omitting details and illustrations.
Trace Describe in narrative form,progress,developmentor sequence ofevents fromsome point
of origin.
Western Zone Office
CXC A24/U2/12
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CARIBBEAN EXAMINATIONS COUNCIL®
Caribbean Advanced Proficiency Examination®
Specimen Papers and
Mark Schemes/Keys
Specimen Papers: - Unit 1, Paper 01
Unit 1, Paper 02
Unit 1, Paper 03/2
Unit 2, Paper 01
Unit 2, Paper 02
Unit 2, Paper 03/2
Mark Schemes/Keys: - Unit 1, Paper 01
Unit 1, Paper 02
Unit 1, Paper 03/2
Unit 2, Paper 01
Unit 2, Paper 02
Unit 2, Paper 03/2

C A R I B B E A N E X A M I N A T I O N S C O U N C I L
ADVANCED PROFICIENCY EXAMINATION
SPECIMEN PAPER
MULTIPLE CHOICE QUESTIONS
FOR
UNIT 1 - Paper 01
90 minutes
READ THE FOLLOWING INSTRUCTIONS CAREFULLY.
1. This test consists of 45 items. You will have 90 minutes to answer them.
2. Each item in this test has four suggested answers lettered (A), (B), (C), (D). Read each item you
are about to answer and decide which choice is best.
Sample Item
Which of the following actions CANNOT be taken by a trade union?
Sample Answer
(A) Strike
(B) Go slow A B C
(C) Picketing
(D) Lock out
The best answer to this item is “Lock out”, so answer space (D) has been shaded.
Copyright © 2010 Caribbean Examinations Council
All rights reserved.
02133010/SPEC 2011

- 2 -
1. Which of the following BEST defines the 5. A company which owns or controls
term ‘privatization’? production or service facilities outside the
(A) The selling of government assets
country in which it is based is referred to
as
to a private business.
(B) Businesses operating privately (A) international
without state interference. (B) multi-national
(C) The transfer of ownership from (C) conglomorate
(D)
public sector to private entity. (D) export-oriented
When a business, public or private,
decides to keep decisions secret.
2. One advantage of a mixed economy is that
(A) the state provides public goods
(B) there is no wastefulcompetition
(C) the price of all goods is dictated by
market forces
(D) the private sector provides essential
services for consumers
6. Which of the following is NOT a feature of
a free market economy?
(A) Long term planning
(B) Good worker motivation
(C) Inefficient public transportation
(D) No restrictions on pollution control
7. Which of the following are reasons for
setting objectives?
3. The mission statement of an organization I. To know what to do if things go
defines the organization’s wrong
(A) strategic objectives
II. To monitor progress as it takes
place
(B) purpose and direction
III. To identify how much profit has(C) long-term goals which it hopes to
been made
achieve
IV. To ensure that everything is going
(D) strategic, tactical and operational
as planned
objectives
(A) I and II only
4. Government’s payment to a domestic
(B) I and III only
(C) II and III only
producer in the form of a tax relief is known
(D) II and IV only
as
(A) quota
8. The benefits which large firms enjoy over
(B) tariff
small firms is referred to as(C) subsidy
(D) corporate tax
(A) economies of scale
(B) profit maximization
(C) economic wellness
(D) goodwill of the firm
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02133010/SPEC 2011

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9. Which of the following is NOT a criterion
for measuring the size of a firm?
(A) Labour force
(B) Market share
(C) Capital layout
(D) Capital structure
10. Which of the following are benefits of
Caribbean-based multi-national
companies?
I. Reduced imports
II. Repatriation of profits
III. Creation of employment
(A) I and II only
(B) I and III only
(C) II and III only
(D) I, II and III
11. At what managerial level of the
organization’s hierarchy are strategic
planning decisions made?
(A) Top
(B) Middle
(C) First Line
(D) Lower Level
02133010/SPEC 2011
12. Some objectives of trade unionism include
I. collective bargaining
II. industrial democracy
III. strike action
IV. educating its members
(A) I and II only
(B) II and IV only
(C) I, II and IV only
(D) I, III and IV only
13. Mrs Stunning, who is a heart patient,
declined a job offer as a gym instructor.
What key factors were likely to have
influenced her decision?
(A) Social
(B) Economic
(C) Human constraints
(D) Ecological considerations

- 4 -
Items 14–15 refer to the following Balance Sheet of General Motors Ltd.
GENERAL MOTORS LTD.
Balance Sheet as at 31 December 2010
Liability & Owners Equity Assets
Share Capital $ 139 600 Freehold Property $ 50 000
General Reserves $ 15 000 Plant and Machinery $ 75 000
Bank Overdraft $ 3 000 Fixtures and Fittings $ 5 000
Creditors $ 1 500 Motor Vehicles $ 10 000
Tax Payable $ 2 000 Stock $ 14 000
Accrued costs $ 900 Debtors $ 3 000
Cash $ 4 000
Prepayment $ 1 000
$ 162 000 $ 162 000
14. What is the Acid Test or Quick Ratio? 15. What is the current ratio?
(A) 1.1:1 (A) 2.7:1
(B) 1.2:1 (B) 2.9:1
(C) 1.5:1 (C) 3:1
(D) 2:1:1 (D) 3.2
16. Which of the following statements BEST 17. The human relations view of conflict states
explains Mayo’s ‘Hawthorne Effect’? that
(A) Once the individual’s need is (A) conflict in organizations is always
satisfied it will no longer provide dysfunctional
the impetus to action. (B) the best strategy to resolve conflict
(B) People only act to achieve their is avoidance
goals if they feel they will be (C) a good manager can resolve every
successful. conflict effectively
(C) If work is not interesting, (D) conflict is natural and inevitable
challenging or rewarding, workers and can be positive
will not be satisfied or motivated.
(D) When management consults with
workers and takes an interest in
their work then motivation is
improved.
02133010/SPEC 2011

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18. The person who is elected at the workplace
to represent union members at a local level
is the
(A) shop steward
(B) branch officer
(C) executive leader
(D) trade union leader
19. Which of the following management
functions assigns tasks and resources?
(A) Leading
(B) Planning
(C) Controlling
(D) Organizing
20. A leader can BEST be described as one who
(A) emerges from within the group
(B) is appointed to a position of formal
authority
(C) organizes resources to meet the
objectives of the organization
(D) influences others to perform
beyond the actions dictated by
formal authority
21. Mark, the manager of ABC Co. Ltd., has
been described as an individual who was
born with outstanding leadership qualities
hence his effectiveness as a leader.
Which of the following approaches to the study
of leadership can be associated with the
assumption of Mark’s situation above?
(A) Trait Theory
(B) McGregor Theory X
(C) McGregor Theory Y
(D) F.W. Taylor Scientific Management
02133010/SPEC 2011
30. Which of the following is a reason for
decentralization?
(A) The need for consistent policies
throughout the organization
(B) Greater economies of scale would
be gained
(C) To retain the same business
identity in all markets
(D) The need to make more informed
decisions which reflect different
market conditions
31. The greatest scope for increased
responsibility and recognition in the
workplace is provided by job
(A) rotation
(B) assessment
(C) enlargement
(D) enlargement
32. The Production Manager makes suggestions to
his superior about ways to improve the
efficiency of the department. Which form of
communication flow does this represent?
(A) Lateral
(B) Upward
(C) Horizontal
(D) Downward
33. Which of the following MUST be present if
a team of workers is to achieve its desired
objectives?
(A) Interdependence
(B) Open communication
(C) Charismatic leadership
(D) Shared sense of purpose

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26. When the marketing manager advises the
production manager on a new product,
what type of authority is displayed by the
marketing manager?
(A) Line
(B) Staff
(C) Functional
(D) Line and Staff
27. When Sonia Green, the Marketing
Manager of Sonia’s Shoe Stores, sets
new sales targets and develops strategies
to achieve them, she is demonstrating the
management function of
(A) leading
(B) planning
(C) controlling
(D) organizing
28. In Maslow’s hierarchy of needs, in which
level of needs does ‘open and honest
communication among employees’ belong?
(A) Safety
(B) Social
(C) Esteem
(D) Self actualization
29. The BCG Banking & Investment Company
is planning to computerize some of its
services within the next six months. How
BEST should management implement this
change?
(A) ‘Leak’ information and await
feedback and train the remaining
employees.
(B) Offer voluntary severance and train
the remaining workforce.
(C) Meet with key personnel and await
feedback prior to implementation.
(D) I m p l e m e n t a r e d u n d a n c y
programme with immediate effect.
02133010/SPEC 2011
34. Which of the following types of
responsibilities is an organization
satisfying when it makes choices and takes
actions that will contribute to the welfare
and interests of the society?
(A) Legal
(B) Social
(C) Ethical
(D) Strategic
35. Which of the following forms of capital is
another name for ‘shareholders’ fund?
(A) Equity
(B) Start up
(C) Waking
(D) Joint Venture
36. Which of the following is NOT a part of the
money market?
(A) Development Bank
(B) Commercial Bank
(C) Merchant Bank
(D) Credit Union
37. Which of the following long-term sources
of finance is external?
(A) Leasing
(B) Trade credit
(C) Share capital
(D) Hire purchase
38. Which of the following is NOT an
investment appraisal technique?
(A) Cost benefit
(B) Payback period
(C) Net present value
(D) Average rate of return

- 7 -
35. If a company is highly geared,it means that 40. The following information is taken from
a high proportion of its finance is the books of Louis Thorpe’s business.
(A) cash $
(B) loan Opening Stock 5 000
(C) profit Wages 2 500
(D) equity Purchases 12 000
Closing Stock 2 000
36. Which of the following is NOT an item on What is the TOTAL cost of goods sold?
the balance sheet of a company?
(A) Cash
(A) $ 10 000
(B) $ 12 000
(B) Bank overdraft (C) $ 15 000
(C) Wages and salaries (D) $ 16 500
(D) Plant and machinery
37. Which of the following sources of
finance is LEAST likely to be used as
investment in a new product development?
41. Which of the following is the MOST
appropriate source of finance for an
entrepreneur who wants to expand his air
conditioning and refrigeration business?
(A) Bank loan
(B) Debentures
(C) Share issues
(D) Bank overdraft
38. Sunshine Limited keeps records and accounts
of all of its financial transactions.
Which of the following groups is the
MAIN user of this financial information?
(A) Suppliers
(B) Employees
(C) Government
(D) Management
(A) Bank loan
(B) Debenture
(C) Share issue
(D) Retained earning
42. Machinery cost $ 800 000 and is expected
to last for five years and produce an annual
net cash inflow of $ 240 000. This
investment has an average rate of return
(ARR) of
(A) 15%
(B) 30%
(C) 50%
(D) 67%
39. Managers of Atlas Ltd. have decided to
purchase additional equipment using
internal funds. They would MOST likely
finance this through
(A) hire purchase
(B) retained profits
(C) a bank overdraft
(D) sale and lease back
02133010/SPEC 2011

- 8 -
43. The following table is an extract from the
books of Booboo’s Co. Ltd.
$
Sales 17 000
Opening Stock 2 400
Closing Stock 1 350
Purchase 12 500
The gross profit ratio is
(A) 4%
(B) 20%
(C) 80%
(D) 96%
44. The following is an extract of a firm’s
balance sheet as at 31 December 2010.
EXTRACT
Opening Capital $ 200 000
Net Profit $ 100 000
Drawings $ 50 000
$ 350 000
The return on capital invested is
(A) 33⅓ %
(B) 40%
(C) 50%
(D) 80%
Item 45 refers to the following table.
Net cash inflow from operation $ 46 000
Taxation paid $ 12 000
Payment of fixed asset $ 19 000
Share issue $ 13 000
45. The closing cash balance is
(A) $ 2 000
(B) $ 26 000
(C) $ 28 000
(D) $ 40 000
END OF TEST
02133010/SPEC 2011

CARIBBEAN ADVANCEDPROFICIENCYEXAMINATION
UNIT 1, PAPER 01
MARK SCHEME

CARIBBEAN ADVANCED PROFICIENCY
EXAMINATION
MANAGEMENT OF BUSINESS – UNIT 1
SPECIMEN PAPER 2011
Item No. Key
1 C
2 A
3 B
4 C
5 B
6 C
7 D
8 A
9 C
10 B
11 A
12 C
13 C
14 A
15 C
16 D
17 D
18 A
19 D
20 D
21 A
22 D
23 C
Item No. Key
24 B
25 D
26 C
27 B
28 B
29 D
30 B
31 A
32 D
33 A
34 A
35 B
36 C
37 D
38 D
39 B
40 C
41 A
42 C
43 B
44 C
45 C
02133010/SPEC 2011

TEST CODE 02133020 CAPE/SPEC/2011
FORM – TP 02133020 CAPE/SPEC/2011
CARIBBEAN EXAMINATIONS COUNCIL
ADVANCED PROFICIENCYEXAMINATION
UNIT 1
PAPER 02
SPECIMEN PAPER
2 ½ hours
INSTRUCTIONS TO CANDIDATES
1. This paper consists of THREE sections.
2. Each section consists of TWO questions.
3. Candidates MUST answer ONE question from EACH section.
4. Each question is worth a total of 25 marks.
5. The overall total on this Paper 02 is 75 marks.
DO NOT TURN THIS PAGE UNTIL YOU ARE TOLDTO DO SO.
Copyright © 2010 Caribbean Examinations Council
All rights reserved.
02133020 CAPE/SPEC/2011

2
SECTION A
MODULE 1: BUSINESS AND ITS ENVIRONMENT
Answer ONE question from this section.
1. AJ Engineering has recently been accused of dumping its toxic waste in a river that runs through a
nearby town.
(a)(i) Define the term ‘business ethics’.
(2 marks)
(ii) State TWO reasons why the dumping of toxic waste in a river could be considered unethical
behaviour.
(4 marks)
(b) Discuss TWO ways in which the behaviour outlined above could negatively impact the
business of AJ Engineering.
(6 marks)
(c)(i) Explain the term ‘strategic objectives’. (3 marks)
(ii) Discuss THREE strategic objectives that a typical firm could pursue.
(10 marks)
Total 25 marks
2. (a)(i) Explain the term ‘globalization’.
(3 marks)
(ii) Outline THREE factors which have contributed to the growth of globalization.
(6 marks)
(b) Discuss, using suitable examples, FOUR ways in which globalization
may impact organizations operating within the Caribbean business environment.
(16 marks)
Total 25 marks
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02133020 CAPE/SPEC/2011

3
SECTION B
MODULE 2: THE MANAGEMENT OF PEOPLE
3. (a)(i) State the assumption of the Trait Theory of leadership.
(2 marks)
(ii) Outline TWO short comings of the trait theory.
(4 marks)
(b) Sam, the manager of BBF Co. Ltd, has been described by his employees as a
participative leader.
(i) Define the term ‘participative leadership’.
(1 mark)
(ii) Discuss TWO advantages and TWO disadvantages of participative leadership.
(12 marks)
(c) Outline THREE situations in which participative leadership would be useful to
BBF Co. Ltd.
(6 marks)
Total 25 marks
4. Change is a crucial element in an organization’s ability to survive and grow.
(a)(i) State THREE reasons for change in an organization.
(3 marks)
(ii) Outline the main role of the ‘change agent’ in the change process.
(2 marks)
(b) Outline FOUR reasons why employees may resist change.
(8 marks)
(c) Discuss THREE methods that can be used to address resistance to change.
(12 marks)
Total 25 marks
02133020 CAPE/SPEC/2011

4
GO ON TO NEXT PAGE
SECTION C
MODULE 3: BUSINESS FINANCE AND ACCOUNTING
5. Peak Partners manufactures and sells local wine. The company wants to develop a standard cost per
gallon to be used as a basis for pricing its products.
During the month of March, Peak Partners produced eight 100-litre batches of wine. They used 3 650
kilogrammes of local fruits at $0.98 per kilogramme for the production of the wine. Direct labour
costs incurred during the period amounted to $14 775.00 at a rate of $7.50 per hour.
The standard amount of local fruits for producing a 100-litre batch of wine is 417 kilogrammes at
$1.00 per kilogramme and the standard labour hour per 100-litre batch of local wine is 224 hours at
$7.00 per hour.
It was determined that the material price variance was $71.20 favourable, while the material usage
variance was $224.00 adverse. In addition, the labour rate variance was $985.00 adverse.
(a) State THREE reasons for EACH of the THREE variances.
(9 marks)
(b) Outline THREE reasons why it is important to prepare a budget.
(9 marks)
(c) Discuss TWO reasons why some managers may NOT support the
preparation of budgets.
(7 marks)
Total 25 marks
6. (a) (i) State TWO differences between fixed assets and current assets.
(4 marks)
(ii) State ONE reason,other than capital employed, for an increase in capital.
(1 mark)
(iii) Outline ONE reason for the difference between the gross profit and net profit
of a business.
(2 marks)
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02133020 CAPE/SPEC/2011

5
Following are the financial statements of S. Bell for the year ended 30 June, 2010.
Income Statement for Year Ending 30 June, 2010
$ $
Sales 40 800
Opening Stock 8 000
Purchases 32 000
40 000
Closing stock 6 400
33 600
Gross profit 7 200
Expenses 1 850
Net Profit 5 350
Balance Sheet as at 30 June, 2010
$ $
Fixed Assets 30 000 Opening Capital 30 000
Stock 6 400 Net Profit 5 350
Debtors 8 800
Bank 4 750 35 350
Drawings 800
49 950
Loans 34 550
10 000
Creditors
Accrued Expenses 44 550
2 800
2 600
49 950
(b) Compute, correct to one decimal place, the following ratios for the year ended 30 June, 2010 and
explain what EACH ratio shows about the performance of the company.
(i) Acid test
(ii) Return on capital or equity
(iii) Stock turnover
(iv) Mark-up
(v) Gearing ratio
(vi) Net profit margin
(18 marks)
Total 25 marks
02133020 CAPE/SPEC/2011

6
END OF TEST
02133020 CAPE/SPEC/2011

02133020 SPEC /CAPE MS 2011
ADVANCED PROFICIENCY EXAMINATIONS
UNIT 1 – PAPER 02
KEY AND MARK SCHEME
SPECIMEN 2011

2
UNIT 1 - PAPER 2
2011 KEY AND MARK SCHEMES
Question 1
Specific objectives 4, 3
(a)(i) Definition: Business ethics refers to a set of guiding
principles(1)that direct the behaviour of individuals and
groups.(1)
Definition of Ethics
(2 marks)
(ii) Reasons why the action is unethical
The firm could be taking advantage of loopholes in the laws of the
land.(1) They may be aware that it is difficult for them to be
prosecuted since evidence gathering in this case could be
challenging.(1)
In addition, this company could be guilty of improving profit
levels(1) (by getting rid of toxic waste easily and cheaply) at the
expense of the residents who could get ill.(1)
From a moral-rights perspective - the contamination of the water
will make it no longer safe for use by the residence, hence denying
them to the right to safe drinking water.
Stating Two reasons why the behaviour may be unethical 2 marks each
(4 marks)
(b) Ways in which the behaviour could impact negatively
 Eventually, residents will become aware of the unethical 
practice and could take action against the firm.(1) This
action could take the form of protest action by placarding the
firm’s facilities; By taking the firm to court.(1) This could
be very expensive in terms of legal fees and fines etc.(1)
 In addition, the negative publicity could adversely affect 
future sales.(1) Other potential customers could empathize
with the residents and brand the company with an uncaring
image.(1) They will not trust them to provide products which
are safe.(1)
Discussing TWO ways in which the behaviour can impact negatively
3 marks each
(6 marks)
(c)(i)Strategic objectives are objectives that are used to operationalize
the mission statement of an organization.(1) They are specific and
cover a more well-defined time frame.(1) They provide guidance on
how the organization can fulfil or move toward the broader goals
in the mission.(1)
Explaining the term strategic objectives (3 marks)
02133020 SPEC /CAPE MS 2011

3
UNIT 1 - PAPER 2
(c)(ii) Strategic Objectives that a firm could pursue:
 Diversification 
There are basically two types of diversification:
Related diversification is simply to add products in the area of
endeavour for example, a coffee company going into herbal tea;(1)
Unrelated diversification is probably more popular. This entails
the company going into a totally new field of endeavour.(1) For,
example, the coffee company entering the recording (music)
business. The objective of this strategy is to spread its risks so
that if one company fails, there is a possibility that the other
can succeed especially if the income elasticities are different.(1)
The company can achieve this objective by either starting its own
company or more popularly, buying out an existing one (merger).
 New Product Development 
This refers to the situation where the firm believes that its
present product (or line of products) is entering the mature
stage of the product life cycle.(1) When this occurs, profit
levels could drastically fall, and sales will start to decline
because people may get fed up with the present product.(1) When
this happens it is important that the firm should have created
another product (usually related) that could replace the old
one.(1) For example, a soft drink company developing new
flavours or improvements on the old one.
 New Market Development 
This occurs when the firm believes that it has exhausted all
possibilities of increasing sales from the present market.(1) It
would therefore consider changing its promotional strategies, in
terms of packaging, pricing, etc. and try to place the product
into another segment of the existing market,(1) for example
going into a younger age group. Or it could develop a product
for the export market. This will result in increased sales which
could result in the firm achieving economies of scale and
consequently a lower unit cost, leading to higher profit
levels.(1)
Identifying THREE strategic objectives 1 mark each (3 marks)
Discussing THREE strategic objectives 2 marks each (6 marks)
Discretionary mark for overall quality of response (1 mark)
Total 25 marks
02133020 SPEC /CAPE MS 2011

4
UNIT 1 - PAPER 2
Question 2
Specific objective 6
(a)(i) Globalization: is the trend towards greater interdependence(1) among
nation states and their organizations and people.(1) This is
evidenced by increased flow of goods, services, capital and people
across national boundaries.(1)
Answer must include interdependence or equivalent (3 marks)
Factor which contribute to the growth of globalization
(ii)
 Improvements in technology(1) - including telecommunications 
technology and more recently the internet.(1) With the
massive increase in the number of persons who are exposed to
cable network and the internet,(1) large volumes of
information spread quickly. The relatively low cost of
telephone calls globally has also increased the ability to
connect with the rest of the world.(1)
 Convergence of consumer tastes(1) – preference in taste is
usually spread quickly and people are influenced via
networking such as face book and other media, such as
television advertisement.(1) 

 Education (1)– With the increase in demand for education
people have been motivated to explore educational
opportunities regionally and internationally. (1) 
 Increase in travel (1) – Curiosity in discovering and
leaning new cultures has led to an increase in travel among
countries.(1)
 Political(1) – the agreement by governments to remove or 
reduce trade barriers and the signing of trade treaties, as
well as tax treaties have contributed to growth in trade,
and hence globalization.(1)
Other factors
 One world advocacy 
 Specialization in trade 
 Trade liberalization 
Outlining THREE factors 2 marks each (6 marks)
How globalization can impact organization in the Caribbean:
02133020 SPEC /CAPE MS 2011

5
UNIT 1 - PAPER 2
(b)
Positive impact
 Companies that sell global products can reduce costs by 
standardizing various aspects of their marketing
activities.(1) For instance, a company selling a global
consumer good, such as shampoo, can make an identical
shampoo for the global market, and then simply design
different product packaging to account for the language
spoken in each market.(1)
Companies that sell a global product can explore
opportunities abroad when the home market becomes
saturated.(1) (example Captain’s Bakery in Jamaica has now
established branches in Cayman and other overseas
countries)(1)
Companies selling a seasonal global product can use
international sales to level off their income stream. (by
supplementing domestic sales with international)they can
reduce cost per unit – because of increased production
levels.
 Globalization of production: refers to the dispersal of
production activities to locations around the world
that are low-cost or high quality producers of a
particular good.(1)
Globalization of production can offer several advantages
to business organizations in the Caribbean. These include
access to low-cost labour (1) – a very common way for many
firms to reduce production costs and increase profits.(1)
 Companies can take advantage of know-how from anywhere in
the world. They can access resources that are unavailable or
more costly at home.(1)
Technological innovations are accelerating the process
of globalization making it possible for many products
to be made practically anywhere at its cheapest.(1)
The use of technology can speed up the flow of information
making coordination and control easier and cheaper.(1)
Computer technologies are also increasing the competiveness
of small Caribbean firms by reducing the costs of reaching
an international customer base for example, use of the
internet.(1)
02133020 SPEC /CAPE MS 2011

6
UNIT 1 - PAPER 2
Negative impact
 Caribbean businesses competing on the international market
may find it difficult competing with larger countries in 
terms of cost and quality.(1) They may not have the
resources and technology to produce products of competitive
price as more developed countries.(1) For example, a small
country that manufactures jeans will not be able to compete
with a larger country which can engage is mass production,
thereby making the finished product cheaper (1)
 Brain drain (1)– it is also easy for qualified nationals to
migrate to developed countries causing the Caribbean to lose
its most valuable human resources (1). Quite often, the
financial investment is quite high and is often not
recovered. (1) For example, persons who migrate to other
countries to study and who do very well are often offered
jobs and may not return to their country because more often
than not the remuneration is usually higher.(1) 

Other ways: 

 Continuous training of workforce to match-up changes may
become necessary but costly 

 Managers have to learn to manage cultural diversity in the
new workplace 

 Firms may be forced to maintain international quality
standards – tied to cost 

 Firms may face social/economic and political risks while
operating in another country. 

 Labour costs could rise because of international labour
standards. 
Discussing FOUR impacts of globalization 4 marks each (16 marks)
Comprehensive discussion with suitable examples (4 marks)
Satisfactory discussion (2-3 marks)
Weak discussion (1 mark)
Total 25 marks
02133020 SPEC /CAPE MS 2011

7
UNIT 1 - PAPER 2
Question 3
Assumption:
(a)(i) The Trait Theory of Leadership is based on the assumption that
certain individuals are born with or acquire(1) outstanding
leadership qualities (1) which enable them to become more
effective leaders.
Stating assumption of trait theory ( 2 marks)
(ii) Shortcoming of Assumption
- Traits do not stand alone, the appropriateness of a trait, or
set of traits depends on the leadership situation
- The same trait does not apply to every organization; further
studies have expanded the understanding of leadership beyond
personal traits of the individual to focus on the dynamics of
the relationship between leaders and followers.
Outlining TWO shortcomings of trait theory (4 marks)
(b)(i) A participative leadership style is one which encourages
participation in decision making (1)
Defining participative leadership 1 mark (1 mark)
(ii) Advantages of Participative Leadership
 Full participation in the decision-making process is
encouraged. (1) This may lead to better final decision (1)as
the staff is encouraged to contribute and can offer valuable
work experience.(1)
 Research by Hertzberg has indicated that this style of
management should improve motivation of staff (1) as they are
being given some responsibility (1)for the objectives and
strategy of the business.(1) 

 Workers are usually more committed (1) to ensuring that
decisions they have influenced are put into effect
successfully.(1)They are more likely to embrace the
decisions.(1) 
Discussing TWO advantages 3 marks each (6 marks)
02133020 SPEC /CAPE MS 2011

8
UNIT 1 - PAPER 2
Disadvantages of Participative leadership
 Consultation with staff can be time consuming (1)– and can
often lead to lengthy arguments and no consensus (1) on some
occasions, when quick decision making are required (1)
 Some issues might be too sensitive (1) for workers’
involvement,(1) e.g. job losses; development of new products;
and other confidential issues.(1) 
N.B. Candidates are required to develop points to a
comprehensive discussion using appropriate example.
Discussing TWO advantages 3 marks each (6 marks)
(c) Situations in which Participative leadership is useful/appropriate
• It is most likely to be useful in businesses that expect workers
to contribute fully to the production and decision-making(1)
processes, thereby satisfying their higher-order needs.(1)
• An experienced (1) and flexible workforce (1) will be likely to
benefit most from this style.
• In situations that demand a new way of thinking or a new
solution(1); here staff input can be very valuable.(1)
Outlining THREE situations 2 marks each (6 marks)
Total 25 marks
02133020 SPEC /CAPE MS 2011

9
UNIT 1 - PAPER 2
Question 4
Specific objective 8
(a)(i) Reasons for organizational changes
External forces eg reduction in funding
 To address new markets 
 The need to increase productivity/services 
 New direction/goals based on perspectives of new management 

 Need for change in the structure of the organization to respond
to changing needs 
Any THREE reasons 1 mark each (3 marks)
(ii) The main role of the change agent
To translate the vision into a realistic plan (1) and to execute
(1) the plan.
Outlining role (2 marks)
(b) Reasons why employees resist change:
 The fear of personal loss(1) is perhaps the biggest reason 
employees resist change. A proposed change in a job design,
structure or technology may lead to a perceived loss of
power,(1) prestige, pay or company benefits, so persons
having a vested interest in maintaining the status quo,(1)
often resist change.
 Employees often do not understand the intended purpose (1) of
a change or distrust the intentions behind it.(1) If previous
working relationships with the persons championing the idea
have been negative,(1) resistance may occur. 

 Employees may resist change if they and their managers assess
the situation differently.(1) Often critics voice legitimate 
disagreements over the proposed benefits of a change.
Managers in each department pursue different goals,(1) and an
innovation may detract from performance and goal achievements
for some departments and their employees.(1)
 Lack of information about future events (1) can cause
employees to resist change. It represents a fear of the
unknown, and is especially threatening for employees who have
a low tolerance for change and fear the novel and unusual.
They do not know how a change will affect them (1) and worry
about whether they will be able to meet the demands of a new
procedure or technology.(1) 
Outlining any FOUR reasons 2 marks each (8 marks)
02133020 SPEC /CAPE MS 2011

10
UNIT 1 - PAPER 2
(c) Methods of addressing resistance to change:
 Education and communication (1) have been used when there is a
lack of information or inaccurate information and
analysis.(1) This method has the advantage that people, once
persuaded, will often help with the implementation of the
change.(1)
 Participation and involvement (1) have been used when the 
initiators of change do not have all the information they
need to design the change, and others have considerable power
to resist. The advantage of this approach is that people who
participate will be committed to implementing change, their
ideas can be integrated into the change plan.(1) The drawback
of this approach is that it can be very time consuming and
costly if participants design an inappropriate change.(1)
 Negotiation and agreement(1)are commonly used when someone or
some group will clearly lose out in a change, and that person
or group has considerable power to resist. The advantage of
this method is that it can be a relatively easy way to avoid
major resistance.(1) However, it can be too expensive in many
cases if it alerts others to negotiate compliance.(1) 



 Manipulation and cooptation (1) is used when other tactics
will not work or are too expensive. It has the advantage of
being a relatively quick and inexpensive (1) solution to
resistance problems. The drawback is that it can lead to
future problems if people feel manipulated.(1) 
Identifying THREE methods of addressing resistance to change 1
mark each (3 marks)
Discussing THREE methods of addressing resistance to change 3
marks each (9 marks)
(12 marks)
Total 25 marks
02133020 SPEC /CAPE MS 2011

11
UNIT 1 - PAPER 2
Question 5
(a) Possible reasons for material price
 Seasonal prices were better than anticipated 
 Lower quality of raw materials were purchased 

 The person doing the purchasing was more knowledgeable of
the market and was able to obtain favourable prices 
 The budget was not realistic 
 Discounts were received 
Stating THREE reasons for variance in material price 1 mark each
(3 marks)
Possible reasons for Material Usage
 Pilferage 

 Purchase of a lower quality of raw materials hence more
spoilage 

 Faulty machine which resulted in more raw materials being
used, could have also affected the production of the
finished good 
Stating THREE reasons for material usage 1 mark each (3 marks)
Possible reasons for labour rate
 Higher level of skilled labour was used 
 Scarcity of the required labour on the market 
 Effective union representation 
 Increase in wage rate due to inflation 
Stating THREE reasons for variance in labour rate 1 mark each
(3 marks)
(b) Reason why it is important to prepare a budget
 Planning is compelled: Managers are forced to look ahead and
anticipate any likely problems in the future. Without planning,
the objective may become difficult to achieve. 



 Performance evaluation is enhanced: Managers are able to compare
like items in terms of period. It is better to compare actual
performance with budgeted performance for the same period, than
actual performance of a previous period. The use of a previous
period for comparison would overlook the changes that may have
occurred, as well as the inefficiencies of the previous period. 
02133020 SPEC /CAPE MS 2011

12
UNIT 1 - PAPER 2
 Promotes coordination of activities of each other as this
information is communicated by way of the budget. It also
highlights the relationships between the various units, so that
they can be brought in line with each other. 

 It facilitates the effective allocation of resources so that 
managers know when and how to assign/reassign resources, and
when to acquire more.
 It can serve to promote the commitment of most workers if they
have a realistic target at which to aim. 
Outlining THREE reasons for preparing a budget 3 marks each
(9 marks)
(c) Reasons why some managers may not support budgeting
 It may lead to unnecessary spending, due to the manager’s fear 
that if the budget allocation is not utilized it would be
reduced the following year.
 It may lead to departmental conflicts as various units compete
for scarce resources, as well as units being interested in their
own concerns rather than the organization as a whole (e.g. the
production department producing even though the sales department
is unable to sell the products). 

 In order to be effective, the standard set must facilitate the
greatest motivational impact on the workforce. If there is too
much slack it will defeat the purpose intended, similarly if it
is too challenging persons will not attempt to achieve it. The
standard therefore has to be continuously revised. 
Discussing TWO reasons 3 marks each (6 marks)
Discretionary mark for well developed discussion (1 mark)
Question 6
Specific Objectivies 6, 7
(a)(i) Key difference between fixed and current assets
Current Assets are short-term (1) assets that are expected to be
consumed or change their form during the next accounting period.(1)
Fixed assets are those long-term (1) assets that are used to provide
a service or generate income for the business. They are usually used
for more than one accounting year because they are acquired to be
used by the business, subsequent disposal would not affect their
classification.(1)
Indicating TWO differences between current assets and fixed assets 2
marks each
(4 marks)
02133020 SPEC /CAPE MS 2011

13
UNIT 1 - PAPER 2
(ii) Reason for an increase in capital
Capital can increase due to profits earned during the period under
review.
Stating ONE reason for an increase in capital (1 mark)
(iii) Reason for the difference between gross profit and net profit
Gross profit measures the performance of a business’s main economic
activities.(1) However, expenses are usually incurred in generating
the income.(1) The deduction of these expenses(1) will account for
part of the difference between net and gross profits; other income
can also account for the difference between the two figures.(1)
Outlining ONE reason for difference in gross profit and net profit
(2 marks)
(b)(i) Acid Test
(1)
= 2.509 = 2.509
= 2.51:1 = 2.51:1 (1)
This ratio affords a clearer picture than current ratio of the firm's
ability to pay short term debts. In this instance, where the ratio is
2.51:1 ,there is the likelihood that the firm has more cash on hand
than it really needs.(1) A prudent ratio is often cited as 1:1.
(ii) Return on Equity
(1)
= 0.178 x 100 = 17.8%
The ROE indicates how well the firm has used the financial resources
invested in it by the ordinary shareholders. In this case, returns
seem high and appear to be very satisfactory.(1) However, one needs
to compare with the competition to be sure.
02133020 SPEC /CAPE MS 2011

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